Venezuela launches world’s first government-backed digital currency

CARACAS -Venezuela has formally launched its new oil-backed cryptocurrency, the Petro, as it seeks to pull itself out of economic crisis.

The Nicolás Maduro government plans to issue a total of 100 million digital tokens, which started with the pre-sale of 38.4 million units on Tuesday. The initial value has been set at US$60, based on the price of a barrel of oil in mid-January.

And President Maduro claimed late Tuesday that on the first day the Petro went on sale, investors promised US$735 million.

Following on the sale of the Petro, he said he plans to launch a cryptocurrency backed by gold next week.

“Next week I‘m going to launch the petro gold, backed by gold, which is even more powerful, that will strengthen the petro,” Maduro said in a televised speech.

Despite Maduro’s enthusiasm, Opposition leaders have described the cryptocurrency as an illegal debt issue, and investors have questioned its value given concerns about Venezuela’s solvency and transparency.

The president had announced late last year that he was creating a digital currency to outmanoeuvre US sanctions that were preventing his cash-strapped government from issuing new debt.

The US Treasury Department has also warned US citizens and companies who buy the Petro that they could be violating sanctions.

“Available information indicates that, once issued, the Petro digital currency would appear to be an extension of credit to the Venezuelan government,” it said in a statement.

Venezuela, which has the world’s largest proven oil reserves, is in a deep economic crisis that was triggered, in large part, by a fall in crude oil prices and a drop in oil production.